Announcement of Eighty-Two Million Loan for Electric Power in Argentina on December 18, 1968

• 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 68/69 Subject;: $82 million loan for electric December 18, 1968 power in Argentina A World Bank loan of $82 million, announced today, will assist Argentina in building the largest hydroelectric project ever undertaken in that country -- the El Chocon-Cerros Colorados development which will.have an ultimate capacity of 1,650 megawatts. The Bank loan will be used for El Chocon which will have an initial capacity of 600 MW. Most of the power from El Chocon will be used in the Buenos Aires-Litoral region, the country's largest concentration of popula- tion, 1"..1dustry:r and commerce, which absorbs about 70% of Argentina's public • supply of electricity • The El Chocon project consists of a dam on the Limay River in northern Patagonia, a powerhouse with three 200-MW generating units, and two 700-mile transmission lines to Buenos Aires. The power plant is scheduled for commer- cial operation in mid-1973. Simultaneously, Argentina will construct the Portezuelo Grande flood control works on the Neuquen River which, together with El Chocon, make up the first stage of the El Chocon-Cerros Colorados complex. The second stage, to be execut.ed between 1972 and 1978, provides for the in- stallation of three more 200-MW units at El Chocon powerhouse. It also in- cludes construction of an intake and hydroelectric plant with a capacity of 450 MW at Planicie B~nderita on the Neuquen River. The Bank loan will be made to Hidronor S.A. Hidroelectrica Norpatagonica Sociedad Anonima, a corporation recently established to carry out the El Chocon- • Cerros Colorados development. The loan will be guaranteed by the Argentine /more Bank No. 68/69-ArgentL.1a-Electric PowC!r Republic. interest at 6-1/2%. - 2 - It will be for a term of 25 years, including six years of grace, with • The four following financial institutions will participate in the loan for a total amount.of $800,000: Banca Commerciale Italiana Group, Milan, Italy; The Chase Manhattan Bank N.A., New York; Bankers Trust Company, New York; and Girard Trust Bank, Philadelphia. The total cost of the first stage of El Chocon is estimated at the equivalent of $325 million. The Bank loan of $82 million,will cover the foreign exchange costs of the civil works, consulting services and interest during construction and the cost of penstocks and gates. Hidronor has made arrangements with govern- ments and banks in Belgium, Canada, France, Germany, Italy, Japan, Sweden, Switzerlanu, the United Kingdom and the United States to obtain buyer's credits now expected to reach the equivalent of about $60 million -- to finance powerhouse tit and transmission equipment purchased after competitive bidding by suppliers in the lending countries. The largest contribution to financing El Chocon will be made by Argentina with funds made available to Hidronor from a 5% surtax on sales of electricity and refining of crude oil. The cost of the Portezuelo Grande flood control works, estimated at the equivalent of $32 million, is also being financed by Argentina. In addition to the benefits of electric power from El Chocon, the execution of this large productive scheme in a distant underpopulated and unexploited part of the country may prove to have a significant developmental impact. With flood danger in the Rio Negro Valley removed, once the complex has been completed, the pace of agricultural settlement and development may accelerate and the\. area under • irrigation expand more rapidly.